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One of the penalties for refusing to participate in politics
is that you end up being governed by your inferiors. -- Plato
(429-347 BC)

Tuesday, June 07, 2016

Peter Thiel Should Learn a Broader Litigation Lesson from his Gawker Lawsuit

Lawsuit
Lesson Learned?

by Seton Motley, Contributing Author: Silicon Valley entrepreneur Peter Thiel is a pretty smart guy. As partial evidence, I give you his self-made net worth of $2.7 billion. He co-founded online payment mega-company PayPal – which was in 2002 sold to eBay for $1.5 billion. Anyone who saw the very good flick “The Social Network” knows Thiel was one of the first outside investors in Facebook. He still owns a chunk, and is on their Board. He invested in LinkedIn. He’s…done well.

Thiel obviously has a knack for knowing what is worth his money, time and effort. So it was noteworthy when he officially acknowledged that he helped fund professional wrestler Hulk Hogan’s lawsuit against the online publication Gawker (Gawker had amongst other things posted a Hogan sex tape.) Hogan was awarded $140 million for Gawker’s invasion of his privacy.

Why did Thiel fund Hogan? Because nine years ago, Gawker invaded Thiel’s privacy – with a story headlined “Peter Thiel is Totally Gay, People.” Thiel said Gawker followed up with similarly invasionary stories on several of his friends (and others) – which Thiel said “ruined people’s lives for no reason.”

So Thiel “funded a team of lawyers to find and help ‘victims’ of the company’s coverage mount cases against Gawker.” Which begat Hogan. Thiel assessed why he stepped up: “I can defend myself. Most of the people they attack are not people in my category. They usually attack less prominent, far less wealthy people that simply can’t defend themselves…It’s less about revenge and more about specific deterrence.”

Thiel should apply these very words and this perspective to patents – which he bizarrely loathes and denounces. Thiel doesn’t at all like patent-protection lawsuits – especially when they are filed against him and his business interests.

In fact, this bully abuse of patent holders has contributed to an increase in the number of “patent trolls” people like Thiel loath. “Patent trolls” are actually nothing more than people who own patents – but don’t actively manufacture anything with them. Often they purchase the patents as an investment – to make up the purchase price (and then some) by charging people to license them. A perfectly valid business practice.

Why do the inventors themselves sell their patents? Really, it’s none of your business – it’s their property, and they can do with them whatever legal thing they wish. That being said – there are a couple of routine reasons.

One: Have you ever met an inventor? They can be…quirky. They usually aren’t the CEO type. The last thing most want to do after inventing something – is go into the business of selling, manufacturing and distributing it. They would much prefer to make some coin on their last invention – and plow it into their next. So they sell their patents.

Two: Again, inventors oft don’t have a lot of coin. Certainly not Peter Thiel-coin. So if a giant company (See: Google) steals their patent – they are not in a fiscal position to sue and do anything about it. So to ensure they get something for their patent, they sell it – to people with more coin to fend off the thieves (See: Google).

So opposition to “patent trolls” by the likes of Peter Thiel – actually creates more “patent trolls.” In a sense, inventors are outsourcing the protection of their patents – just as Thiel outsourced his legal campaign against Gawker.

Meanwhile, our United States Congress has crafted legislation (the Innovation and PATENT Acts) – that makes it even harder for inventors to protect their patents. These bills make it more difficult and much more expensive for patent holders to sue in defense of their property.

Which will lead even more cash-strapped inventors – to sell their patents to more-fortified “patent trolls.” Even more of the exact opposite result the likes of Thiel say they want.

Thiel doesn’t like bullies like Gawker – and he’s exactly right. Bullies stink on ice. But Thiel is worth $2.7 billion – which means he too can be a fairly huge bully if wants. Sadly, he appears to want to be – and to embolden and empower other bullies – when it comes to patents.

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